EUR/CHF Outlook:
The EUR/CHF pair is currently likely to decrease as it trades notably below its recent average. The ongoing geopolitical tensions impacting both currencies contribute to the bearish outlook.
Key drivers:
• Rate gap: The European Central Bank faces pressures from higher energy prices, while the Swiss National Bank is expected to remain cautious against excessive CHF strength.
• Risk/commodities: Rising oil prices are elevating inflation risks in the Eurozone, further weighing on the euro due to its status as a net energy importer.
• One macro factor: The ongoing Iran conflict has prompted investors to seek safety in the Swiss franc, affecting demand for the euro.
Range:
Expect EUR/CHF to drift within its recent range, with pressures potentially testing lower extremes.
What could change it:
• Upside risk: Improved energy conditions leading to reduced inflationary pressures could support the euro.
• Downside risk: Further escalation in geopolitical tensions could strengthen the CHF even more, pushing EUR/CHF lower.
